UNITY UNIVERSITY

NETWORK MODELS
MBA621: Quantitative Methods for Decision Making

Group 5
Submitted to: Dr. Yohannes
1/22/2019
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Table of Contents
1. Introduction ..................................................................................................... 2
2. Network Models .............................................................................................. 2
3. Network diagrams ........................................................................................... 3
4. Differences between CPM and PERT ................................................................ 6
5. Critical path method ........................................................................................ 6
6. Fundamentals of a CPA Network ................................................................ 7
7. Earliest start and earliest finish times of an activity ....................................... 11
8. Latest start and latest finish times of an activity ............................................ 13
9. Program Evaluation And Review Technique (PERT) ....................................... 18
10. Crashing ...................................................................................................... 18
11. Excercises ................................................................................................... 18
12. Summary .................................................................................................... 18
13. References .................................................................................................. 18

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1. Introduction
Planning, Scheduling & Controlling are the three important functions of project management. Planning
involves the formulation of objectives and goals that are subsequently translated into specific plans and
projects. Scheduling is concerned about the implementation of activities necessary to achieve the laid
down plans. The function of control is to institute a mechanism that can trigger a warning signal if actual
performance is deviating (in terms of time, cost and some other measures of effectiveness) from the plan.
If such a deviation is unacceptable to the concerned manager, he/she will be required to take corrective
action to bring performance in conformity with the plans.
The PERT & CPM network models are the two mostly known and useful techniques for the purpose of
planning, scheduling and controlling the progress and completion of large and complex projects or for
carrying out the analysis of these three managerial functions. Before we describe the basic concepts used
in the construction and analysis of these models, let us first understand the meaning of a project.

What is a project?
A project can be defined as a set of large number of activities or jobs that are performed in a certain
sequence determined logically or technologically and it has to be completed within:
(i) a specified time,
(ii) a specified cost and
(iii) Meeting the performance standards.

Examples of a project from fairly diverse fields are given below:

1. Introducing a new product in the market.
2. Construction of a new bridge/dam over a river or construction building.
3. Sending a spacecraft to the universe.
4. Research and development of a new product
5. Building a ship
6. Executing a large & complex order on jobbing production.
7. Conducting an advertising campaign

2. Network Models
A Network Model is a graphical representation of a project, depicting the flow as well as the sequence of
well-defined activities and events. CPM (Critical Path Method) and PERT (Program Evaluation and
Review Technique) are the two most well-known network models used to plan and coordinate the flow of
project activities. They were independently developed in the late 1950s, ever since, they have been among the
most widely used network models/techniques.

The network approach helps project managers in planning, scheduling and controlling. As a planning tool
it helps the manager to estimate the requirements of resources viz., materials, equipment, manpower, cost
and time for each activity or tasks of the project. This approach cannot make decisions by its own. It only
provides additional information to executives to facilitate decision making process. Also it does not
provide solution to every management problem. It certainly helps in identification of those activities, jobs
or events which control the completion of the project.

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Generally, Network Models are useful to:

i. Graphically display the activities of a project

ii. Estimate how long a project will take
iii. Indicate which activities are the most critical to timely completion of a project
iv. Indicate how long any activity can be delayed without lengthening the project and so on.

3. Network diagrams
The application of Network Models begins with Network Diagrams. Network Diagram is a diagram
that shows the sequence of the various activities of a project along with the time needed to complete
each activity. This is like a roadmap that shows all of the project's activities drawn as an interconnected
network of tasks. A low-level version tasks can be easily drawn with pencil and paper. When managing
more complex projects it is usually necessary to use computer based project management software to
generate complex network diagrams.
Three types of information are needed to describe a project.
1. Activity information: Break down the project into its individual activities (at the desired level of
detail).
2. Precedence relationships: Identify the immediate predecessor(s) for each activity.
3. Time information: Estimate the duration of each activity.
The project network needs to convey all this information.
A Network Diagram consists of a number of nodes (typically shown as small circles or rectangles) and a
number of arcs (shown as arrows) that lead from some node to another.
To build this Network Diagram, we have to determine the relationships between the tasks involved.
For any particular task, you need to determine whether there are any other activities that must be done
before this task can begin. If there are any, then they are called predecessors.
 Tasks that must be done in a defined sequence are shown by placing them in horizontal order
from left to right.
 Tasks that can occur in parallel (i.e. at the same time) are called concurrent, and are shown in
columns.
These relationships are shown in the diagram below.

Example 1: Lets us consider a project called X and the activities are tabulated as follows:

Draw the Network Diagram of this project X?

Activity Predecessor Duration

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A - 2

B - 6

C - 4

D A 3

E C 5

F A 4

G B,D,A 2

Figure 1: An Example of AON Network Diagram

Two alternative types of project networks diagrams are available for doing this.

1. One type is the Activity-On-Node (AON) project network, where each activity is represented by a node.
The arcs then are used just to show the precedence relationships between the activities. In particular, the
node for each activity with immediate predecessors has an arc coming in from each of these predecessors,
i.e. Nodes are activities, arrows (arcs) indicate the precedence relationships and used frequently in
practical, non-optimization situations. This type is show in Figure 1 above.

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2. The second type is the Activity-On-Arc (AOA) project network, where each activity is represented by
an arc. A node is used to separate an activity (an outgoing arc) from each of its immediate predecessors (an
incoming arc). The sequencing of the arcs thereby shows the precedence relationships between the
activities. i.e. AOA has arcs for activities with nodes being the starting and ending points and is
used in optimization settings.

Figure 2: An Example of AOA Network Diagram

The original versions of PERT and CPM used AOA project networks, so this was the conventional type
for some years. However, AON project networks have some important advantages over AOA project
networks for conveying exactly the same information.

I. AON project networks are considerably easier to construct than AOA project networks.

II. AON project networks are easier to understand than AOA project networks for inexperienced
users, including many managers.

III. AON project networks are easier to revise than AOA project networks when there are
changes in the project.

After you have drawn your diagram check for the following:

 the tasks start from the left side and sequence left to right, i.e. all predecessors must be to the left
of their successor tasks
 there are no loops or backward flow sequences
 all tasks except 'start project' and 'end project' have at least one predecessor and one successor
node and therefore there are no orphan nodes.

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4. Differences between CPM and PERT

Critical Path Method(CPM) Program Evaluation & Review

Technique (PERT)
CPM is activity oriented. PERT is event oriented.
CPM is deterministic. PERT is probabilistic.
CPM places dual emphasis on project time as PERT is primarily concerned with time only.
well cost.
CPM is used for projects which are repetitive PERT is generally used for projects where time required
in nature and comparatively small in size. to complete the activities is not known a priori. Thus
PERT is used for large, R&D type of projects.

One time estimate is possible for activities Three time estimates are possible for activities linking
(No allowance is made for uncertainty) up two events.

5. Critical path method

The critical path method (CPM) is one form of a network diagram that shows the order in which the
activities follow one another and their interdependency. This method uses nodes, (circles) and links,
(arrows), as shown below.

Figure 3: An example of the critical path method using nodes and links.

1 2

What is meant by 'critical path'?

A path is a sequence of tasks from the start to the finish. Each network may have several paths from start
to finish. The critical path is the sequence of tasks that forms the longest duration of the project, based
on the task work estimates. A delay in any of the tasks and all tasks that are on this path affect the final
completion date.

Critical path analysis is a project analysis technique used to predict project duration. It is an important
tool that helps you to fight project overruns. The critical path for a project:
 is the series of activities that determine the earliest time that a project can finish
 is the longest path through the network diagram
 has the least amount of slack or float.

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6. Fundamentals of a CPA Network

 Activity

An activity is any portion of a project which consumes time or resources and has a definable
beginning and ending. For example, "laying of pipe" is an activity requiring the use of resource mainly
effort. Activity may involve labour, paper work, contractual negotiations, machinery operations, etc.
Commonly used terms synonymous with "activity" are "task" and "job".

Activities are graphically represented by arrows, usually with description and time estimates written along
the arrows. The tail of the arrow portraying an activity represents the starting point of the activity and its
head represents its completion. The arrow may be straight slanting, or bent but not broken. The arrow is
not a vector and need not be drawn to scale.

 Events
The beginning and ending points of an activity or a group of activities are called events. Synonyms
of an event are "node" and "connectors" An event is often represented graphically by a numbered
circle, although any geometric figure such as square, oval, rectangle etc. will serve the purpose. We
shall, however, stick to the most commonly used convention for representing an event viz, the circle.
A few examples of events are as follows: (i) Material procured, (ii) Design completed, (iii) Project
started, (iv) Bricks laid, etc.
All activities in a network must commence from some event. Such events are called the tail events
because they are connected to the tail of an activity. Similarly, all activities in a network must have
terminal points called the head event, because it is at the head of an activity. The tail and head
events connected by arrows representing activities i.e. it depicts the dual role of an event.
In a network, symbol "i" is used for the tail event (also called preceding event) and "j" for the
head event (or succeeding event) of an activity. The activity, then being i-j. If an event represents
the joint completion of more than one activity, it is called a merge event. If an event represents the
joint initiation of more than one activity, it is called a burst event.
A network is, then, a graphical representation of a project plan, showing the inter-relationship of
the various activities. Networks are also called arrow diagrams. When the results of time estimates
and computations have been added to a network, it may be used as a project schedule. This is
shown in Figure 2 above.

Conventions adopted in drawing networks: There are two conventions normally adopted while
drawing networks. In the early stages of network drawing, it is suggested that the conventions should be
respected until sufficient experience has been gained to justify dropping them. These conventions are:

a) Time flows from left to right.

b) Head events always have a number higher than that of the tail events.

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The above stated conventions allow activities to be referred uniquely by their tail and head event
numbers, so that "activity 3-4" means only "the activity which starts from event 3 and proceeds to event
4"; it cannot mean "the activity which starts from event 4 and finishes at event 3".

Graphical representation of events and activities: Events are represented by numbers within circles.
Activities are represented by arrows; the arrow-heads represent the completion of the activities. The
length and orientation of the arrow are of no significance whatsoever (chosen only for the convenience of

drawing). Figure 3.

The representation of events and activities is governed by one simple dependency rule which requires that
an activity which depends upon another activity is shown to emerge from the head event of the activity
upon which it depends and that only dependent activities are drawn in this way. Thus, if activity B
depends upon activity A, then the two activities are drawn in figure 3 above.

The dependency rule gives rise to two fundamental properties of events and activities:

1. An event cannot occur until all activities leading to it are complete.

2. No activity can start until its tail event is reached.

The above two properties can be combined into a single one, namely that "no activity may start until all
previous activities in the same chain are completed.

Logical sequencing and connection of activities: A project entails several activities. The arrows are
arranged to show the plan of logical sequence in which the activities of the project are to be
accomplished. The sequence is ascertained for each activity by answering the following three queries viz:

(i) Which activity or activities must be completed before the start of a particular activity?
(ii) (ii) Which activity or activities should follow this?
(iv) Which activities can be accomplished simultaneously?
(v) The activity or activities which immediately come before another activity without any
intervening activities are called predeccessor activities to that activity. The activities which
follow another activity without any intervening activities are called successor activities to that
activity.

In a project of laying a pipe line, the three activities involved may be trenching, laying pipe and welding
pipe. To decide the logical connection between these three activities, it is necessary that they be carried
out in series, the reasoning being that the pipe cannot be laid until trenching has been done and welding
cannot be undertaken until the pipe has been laid. This way we decide the logical sequencing between
different activities.

Errors in logical sequencing: Two types of errors in logic may arise while drawing a network,
particularly when it is a complicated one. These are known as looping and dangling.

(1) Looping: Normally in a network, the arrow points from left to right. This convention is to be strictly
adhered, as this would avoid illogical looping, as shown wrongly below:

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(2) Dangling: The situation represented by the following diagram is also at fault, since the activity
represented by the dangling arrow 9-11 is undertaken with no result.

To overcome the problem arising due to dangling arrows, following rules may be adopted.

i. All events, except the first and the last, must have at least one activity entering and one activity
leaving them.
ii. All activities must start and finish with an event.

(3) Duplicate activities: Consider the following figure:

Figure-4

In the above figure, activities A and B may be called duplicate activities because they have same head
event (i.e 6) and the same tail event (i.e.7). One remedy for such a situation is the introduction of a
dummy activity.
(4) Dummy activity: It is a hypothetical activity which consumes no resource and time. It is represented
by dotted lines (in AOA diagram) and is inserted in the network to clarify activity pattern under the
following situations:
i. It is created to make activities with common starting and finishing events distinguishable.
ii. to identify and maintain the proper precedence relationship between activities that are not
connected by events.
i. to bring all "loose ends" to a single initial and a single terminal event in each network using
dummies, if necessary

For example, problem of duplicate activities in the figure-4 above may be circumvented as
shown in figure-5.

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Figure-5

Figure-6 shows three cases for the following set of dependency relationships:
Activity C is dependent upon both A and B. Activity D is dependent upon A alone.

Figure-6

The first portrayal (on top left of figure-6) is clearly wrong since it shows D as dependent upon not only
A but also B which is not desired. The other portrayal (ii) is also wrong since A is being shown twice and
thus contravenes the fundamental axiom of network that there must be one arrow for each activity. The
way out to this dilemma is the representation by means of the dummy activity. In the third portrayal of
figure -6, C is dependent upon both A and B (via dummy) whereas D is dependent upon just A.

Numbering the events: The event numbers in a network should in some respect reflect their logical
sequences. When a complicated network has been drawn then the problem of assigning numbers to the
events involved in the network arises. A rule devised by D.R. Fulkerson, involving the following steps
may be followed to resolve the problem of numbering the events.

i. An "initial"event is one which has arrow/arrows coming out of it and none of the arrow
entering it. In a network there will be only one such event. Call it “1”.
ii. Delete all arrows coming out from the event 1. This will give us at least one more "initial
event".
iii. Number these events as “2, 3....”
iv. Delete all emerging arrows from these numbered events which will create new initial
events. Then follow step (iii).
v. Continue the above steps till last event is obtained which has no arrows coming out of it.
Consider the numbering of events in the following figure.

Figure-7

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Calculating the critical path

The critical path is determined by adding the path durations together to find the longest one. The
notion of finding the longest path might initially seem a little strange. This should be clarified by the
activity you are about to do.
It is accomplished by performing the following steps:
1. Calculate the time schedule for each activity. This represents the time by which an
activity must begin and the time before which it must be completed. The time schedule data for
each activity includes, the earliest start, earliest finish, the latest start,
latest finish, and finally the float, which is the spare time associated with an activity.
2. Calculate the time schedule for the completion of entire project. This represents the
scheduled date for the completion of the entire project and the probability of completing the
project on or before the deadline.
3. Identify the critical activities. These activities are the ones which must be started and
completed on schedule, or else the project is likely to be delayed.
4. Determine the critical path for the network. This path represents the critical activities
which must be closely followed in order to complete the project on time.

Example 2: Calculate the critical path for the project X given in Example 1?

Solution: The critical path will be (CEG) = 4 + 5+ 2 = 11 days.

This means that you can't complete the project in less than 11 days.

7. Earliest start and earliest finish times of an activity

After preparing the network diagram, we wish to know how long it will take to complete the project and
also to identify the activities in the network that are to be placed under strict control. The basic scheduling
computations involve a forward and then a backward pass through the network. The process of tracing the
network from START to END is called forward pass, and from END to START is called backward
pass. Based on a specified occurrence time for the initial network event, the forward pass computations
give the earliest start and finish times for each activity. By the specification of
the latest allowable occurrence time for the terminal network event, the backward pass computation will
give the latest allowable start and finish times for each activity.
Forward pass computations: As stated above, the purpose of the forward pass is to compute the earliest
start (EST) and finish time (EFT) for each activity. The EST time indicates the earliest time that a given
activity can be scheduled. Earliest finish time (EFT) for an activity indicates the time by which the
activity can be completed, at the earliest. To compute these time estimates, we will first of all compute the
earliest allowable occurrence time for various events of the network.

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It is a convention to keep the earliest allowable occurrence time of the START event as zero. To
understand, how this time estimate for other events is computed, let us consider the following network
diagram.

Figure-8
Earliest allowable occurrence time of an event or Earliest Event Time :
In the network shown above, event 1 stands for the beginning of the activity 1 – 2 and we can say that it
occurs at the time zero i.e. E1 = 0. Event 2 stands for the finish of the activity 1–2 thus event 2 can occur
at the earliest time E2 which is computed as
E2 = 0 + D12 = 0 + 6 = 6, where D12 stands for the duration of activity 1 – 2
Event 3 stands for finish of the activity 2–3 and its earliest time is E3 = E2 + D23 = 6 + 8 =14
The event 4 can occur either at the end of the activity 3 – 4 or at the finish of activity 2 – 4. In this case,
there will be two time estimates as follows:
E4 = E3 + D34 = 14 + 0 = 14
E4 = E2 + D24 = 6 + 10 = 16
In case two or more time estimates exist for a particular event, then the time estimate with maximum
value is retained as the earliest event time and other values are discarded. This maximum value represents
the completion of all the activities ending at the event under consideration. In the above example, the
earliest event time for event 4 will be 16.
A general rule can also be given here for determining the earliest event time as below:
Ej = Max (Ei + Dij), where Ej is the earliest time for event j, Ei is the earliest time for event i, and Dij is
the duration of the activity i-j.
After computing the earliest event time of various events, one can easily compute the earliest start and
finish times of all the activities on the network. The earliest start time of an activity is given by the
earliest allowable occurrence time of the tail event of that activity. Thus, in our example, the earliest start
time of the activity 1–2 will be given by the earliest time of the event 1 i.e. it will be 0. The earliest start
time for the activities 2 – 3 and 2 – 4 will be given by the earliest time of event 2 which is equal to 6. The
earliest
time for the activities 3–4 and 3–5 will be 14 which is the earliest time for the event 3 and so on.
The earliest finish time of an activity will be simply equal to the earliest start time of the activity plus the
duration of that activity. Hence, in our example, earliest finish time of activity 1–2 will be 0+6 = 6, for
activity 2–3, it will be 6+8 = 14 and for activity 2–4, it will be 6+10 = 16 and so on.
The complete computations for all the activities are shown in columns (3) and (4) of table -1
given on the next page.

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8. Latest start and latest finish times of an activity

Backward pass computations: The purpose of the backward pass is to compute the latest start and finish
times for each activity. These computations are precisely a "mirror image" of the forward pass
computations. The term "latest allowable occurrence time of an event" (denoted by Li ) is used in the
sense that the project terminal event must occur on or before some arbitrary scheduled time. Thus, the
backward pass computations are started rolling back by arbitrarily specifying the latest allowable
occurrence time
for the project terminal event. If no schedule date for the completion of the project is specified, then the
convention of setting the latest allowable time for the terminal event equal to its earliest time, determined
in the forward pass, is usually followed, i.e. L = E* for the terminal event of the project. This convention
is called the zero slack convention. Following this, one can also interpret the latest allowable activity
finish time (LFT) as the time to which the completion of an activity can be delayed without directly
causing any increase in the total time to complete the project.
To explain the computation, let us again consider the network diagram in Figure-8. The terminal event is
6 so we set L6 = E6 = 52 and we start rolling back. The latest allowable occurrence time for the events 5
and 4 are L5 = 52 – 16 = 36 and L4 = 36–20 = 16 respectively. It may be noted here that we can roll back
to event 3 via activity 3-5 as well as activity 4–3. So there are two latest allowable occurrence times for
the event 3 as given below;
L3 = L4 – D34 = 16 – 0 = 16
L3 = L5 – D35 = 36 – 6 = 30
We retain the minimum value as the latest occurrence time for the event 3 and ignore other values.
Therefore, the latest allowable occurrence time for the event 3 is 16.
Similarly
L2 = L3 – D23 = 16 – 8 = 8 and
L2 = L4 – D24 = 16 – 10 = 6
The latest occurrence time for the event 2 is thus 6 and the latest occurrence time for the
event 1 is equal to its earliest time i.e. zero.
In general, the latest allowable occurrence time of an event can be calculated by selecting an appropriate
formula among the following two:
Li = Lj – Dij or Li = minimum (Lj – Dij)
The second formula is used for the event having two or more latest allowable occurrence
time estimates.
After computing latest allowable occurrence time for various events, one can compute the latest start and
latest finish times of an activity. The latest finish time of an activity is equal to the latest allowable
occurrence time of the head event of that activity.
i.e. LFT (i – j) = Lj
The latest start time of an activity is equal to its latest finish time minus its duration.
i.e LST (i – j) = LFT (i – j) – Dij

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Table -1
The critical path determination: After having computed various time estimates, we are now interested
in finding the critical path of the network. A network will consist of a number of paths. A path is a
continuous series of activities through the network that leads from the initial event (or node) of the
network to its terminal event. For finding the critical path, we list out all possible paths through a network
along with their duration. In the network under consideration, various paths have been listed below.

Critical path: A path in a project network is called critical if it is the longest path. The activities lying on
the critical path are called the critical activities.
In the above example, the path 1–2–4–5–6 with the longest duration of 52 days is the critical path and the
activities 1–2, 2–4, 4–5 and 5–6 are the critical activities.
Calculation of Floats: It may be observed that for every critical activity in a network, the earliest start
and latest start time are the same. This is so since the critical activities cannot be scheduled later than their
earliest schedule time without delaying the total project duration, they do not have any flexibility in
scheduling. However, non-critical activities do have some flexibility i.e. these activities can be delayed
for some time without affecting the project duration. This flexibility is termed as slack in case of an event
and as float in case of an activity.
Slack time for an event
The slack time or slack of an event in a network is the difference between the latest event time and the
earliest event time. Mathematically it may be calculated using the formula Li –Ei. where Li is the latest
allowable occurrence time and Ei is the earliest allowable occurrence time of an event i.
Total float of an activity: The total activity float is equal to the difference between the earliest and latest
allowable start or finish times for the activity in question. Thus, for an activity (i-j), the total float is given
by: TFij = LST – EST or TFij = LFT – EFT
In other words, it is the difference between the maximum time available for the activity and the actual
time it takes to complete. Thus, total float indicates the amount of time by which the actual completion of
an activity can exceed its earliest expected completion time without causing any delay in the project
duration.

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Free Float: It is defined as that portion of the total float within which an activity can be manipulated
without affecting the float of the succeeding activities. It can be determined by subtracting the head event
slack from the total float of an activity. i.e
FFij = TFij – (slack of event j)
The free float indicates the value by which an activity in question can be delayed beyond
the earliest starting point without affecting the earliest start, and therefore, the total float of
the activities following it.
Independent float: It is defined as that portion of the total float within which an activity can be delayed
for start without affecting float of the preceding activities. It is computed by subtracting the tail event
slack from the free float of an activity.
IFij = FFij – (slack of event i)
The independent float is always either equal to or less than the free float of an activity. If a negative value
is obtained, the independent float is taken to be zero.
Interfering float: Utilization of the float of an activity can affect the float of subsequent activities in the
network. Thus, interfering float can be defined as that part of the total float which causes a reduction in
the float of the successor activities. In other words, it can be defined as the difference between the latest
finish time of the activity under consideration and the earliest start time of the following activity, or zero,
whichever is larger. Thus, interfering float refers to that portion of the activity float which cannot be
consumed without affecting adversely the float of the subsequent activity or activities.

Activity Duration

1-2 4 days

1-3 12 days

1-4 10 days

2-4 8 days

2-5 6 days

3-6 8 days

4-6 10 days

5-7 10 days

6-7 0 days

6-8 8 days

7-8 10 days

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8-9 6 days

With the help of the activities given above draw a network. Determine its critical path, earliest start time,
earliest finish time, latest start time, latest finish time, total float, free float and independent float.
Solution
The network based on the activities given in the example is as follows:

The Time Estimates and Floats are calculated as follows:

The critical path is represented by 1-2-4-6-7-8-9.

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Example:
Analyse the network below for the critical path and for different floats

(N.B.: Activities must always be arranged in the i-j sequence.)

Explanation: Consider activity 1–3. The slack of head event 3 is 13–13 = 0. Therefore, free float = 9–0 =
9. Likewise slack of tail event 1 is 0 – 0 = 0. Therefore independent float = 9.

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9. Program Evaluation And Review Technique (PERT)

Another project time management technique is the Program Evaluation Review Technique
(PERT). This analysis technique is used when there is a high degree of uncertainty about the
individual activity duration estimates.
PERT applies the critical path method to a weighted average duration estimate.
PERT uses probabilistic time estimates, which are duration estimates based on using:
 optimistic
 most likely, and
 pessimistic estimates of the activity durations.
These three estimates are then statistically averaged using a formula which will be discussed in
the next section.

10. Crashing

11. Excercises

12. Summary

13. References

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